Correlation Between Baker Hughes and Newmont Corp
Can any of the company-specific risk be diversified away by investing in both Baker Hughes and Newmont Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Baker Hughes and Newmont Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baker Hughes Co and Newmont Corp, you can compare the effects of market volatilities on Baker Hughes and Newmont Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Baker Hughes with a short position of Newmont Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and Newmont Corp.
Diversification Opportunities for Baker Hughes and Newmont Corp
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Baker and Newmont is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Corp and Baker Hughes is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Baker Hughes Co are associated (or correlated) with Newmont Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Corp has no effect on the direction of Baker Hughes i.e., Baker Hughes and Newmont Corp go up and down completely randomly.
Pair Corralation between Baker Hughes and Newmont Corp
Assuming the 90 days trading horizon Baker Hughes Co is expected to generate 0.87 times more return on investment than Newmont Corp. However, Baker Hughes Co is 1.15 times less risky than Newmont Corp. It trades about 0.07 of its potential returns per unit of risk. Newmont Corp is currently generating about -0.02 per unit of risk. If you would invest 3,404 in Baker Hughes Co on September 24, 2024 and sell it today you would earn a total of 608.00 from holding Baker Hughes Co or generate 17.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Baker Hughes Co vs. Newmont Corp
Performance |
| Timeline |
| Baker Hughes |
| Newmont Corp |
Baker Hughes and Newmont Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Hughes and Newmont Corp
The main advantage of trading using opposite Baker Hughes and Newmont Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Newmont Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Newmont Corp will offset losses from the drop in Newmont Corp's long position.| Baker Hughes vs. Schweiter Technologies AG | Baker Hughes vs. Playtech Plc | Baker Hughes vs. Tyson Foods Cl | Baker Hughes vs. Zegona Communications Plc |
| Newmont Corp vs. Uniper SE | Newmont Corp vs. Mulberry Group PLC | Newmont Corp vs. London Security Plc | Newmont Corp vs. Triad Group PLC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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